US: Pepsi Bottling income up, despite flat volumes

The world's largest bottler of Pepsi beverages, the Pepsi Bottling Group, today reported that its fourth quarter net income has leapt to US$57m, compared to fourth quarter 2001 net income of US$13m.

Net income for the full year 2002 was US$428m, or EPS of $1.46. These results compare, and full year 2001 net income of US$305 million, or $1.03 per share.

The increase in income has come despite the fact that worldwide physical case volumes came in flat for the quarter and rose only 2% for the year. US physical case volume was down 1% during the fourth quarter, but up 1% for the full year.

But net revenues per case grew a solid 3% in the US during the fourth quarter, reflecting pricing increases taken in the majority of its markets. For the year, reported net revenue per case increased 3% in the US and 1% worldwide.

"As we closed out 2002, we delivered strong earnings growth for our shareholders, while expanding our business substantially," said John T. Cahill, chairman and chief executive officer of PBG. "During the fourth quarter, US volume growth was particularly challenging as we lapped the tremendously successful new product introductions that occurred in 2001.

"At the same time, we were hit with extraordinarily cold, wet weather, which impacted our cold drink business. However, we achieved solid gains in net revenue per case, reflecting pricing actions taken early in the quarter. Our year was also marked by significant acquisition activity, with six new territories acquired, including the bottling operations in Turkey and Pepsi-Gemex. These new businesses provide a solid foundation for additional growth and expansion in the future."

Cahill continued: We are also encouraged by the current trends in the US pricing environment, where the increases we took last quarter are holding. With the right brands, proven business strategies and a driven workforce, we are ready to deliver another year of strong results for our shareholders."

The company stated that in fiscal 2003 it expects to achieve EPS of $1.68 to $1.74, along with a three to four percent growth in constant territory volume and an increase in reported operating income of 15 to 20%.

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